Chemed Corporation (CHE) Earnings & Analysis

Latest quarter

Chemed reported third-quarter revenue of $690.9 million, above the $680.1 million consensus. Adjusted earnings per share were $6.75, also above the $6.39 consensus. Revenue rose 10.6% from $624.9 million a year earlier, while diluted earnings per share increased to $5.45 from $4.46.

Chemed’s filing attributed the revenue increase to growth of 12.2% at VITAS and 7.5% at Roto-Rooter. At VITAS, the filing cited more days of care and a higher average Medicare reimbursement rate; at Roto-Rooter, it reported growth across all service lines.

The filing showed gross margin rising to 33.7% from 32.0%, helped by increased VITAS revenue and a lower Medicare cap billing limitation. Operating margin rose to 14.0% from 12.0%. Chemed reported free cash flow of $37.9 million, down from $69.3 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Kevin McNamara said VITAS admissions totaled 18,995 in the third quarter of 2026, up 7.2% from a year earlier. VITAS CEO Joel Wherley said its average daily census rose 9.4% to 24,428 patients and that hiring accelerated in September to support patient growth. Wherley said electronic staffing tools helped managers adjust daily staffing levels, while selling, general and administrative costs declined $2.1 million from the prior-year quarter.

At Roto-Rooter, McNamara said same-store revenue grew 5.5% in the third quarter of 2026, exceeding internal expectations. He said commercial revenue rose approximately 10.9% at branches with commercial business managers, compared with 4.8% at branches without them. He also said the average price per water-restoration job increased 2.8%, reversing a multi-quarter decline.

McNamara said customer acquisition remained a challenge: free internet-search leads fell 11.8% year over year, while paid leads rose 5%. He attributed a $4.3 million increase in quarterly marketing spending to the change in lead mix. CFO Mike Witzeman said higher customer-acquisition and fuel costs pressured Roto-Rooter’s margin and expects both pressures to persist in the fourth quarter.

Witzeman said Roto-Rooter reacquired California franchise territories for approximately $62.5 million in the third quarter of 2026. He said acquired franchisees often have lower EBITDA margins than owned branches and that implementing the full operating model takes 12 to 18 months.

Asked about competition and market share, Witzeman said industry statistics were limited, but he believed Roto-Rooter was taking share from smaller operators. Asked about the earnings outlook, he said the company was signaling that it remained on track for its fourth-quarter guidance after exceeding its third-quarter expectation.

Guidance

CFO Mike Witzeman said Chemed expects full-year 2026 adjusted earnings per share to finish at or slightly above the high end of its previous guidance. In the question-and-answer session, he said the contribution from each operating unit could differ from the prior guidance, with VITAS having come in higher and Roto-Rooter income lower than guided in the third quarter.